Nicholas Oulton's picture
Affiliation: 
London School of Economics
Credentials: 
Senior Visiting Research Fellow

Voting history

Wages and economic recoveries

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Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?

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Answer:
Agree
Confidence level:
Very confident
Comment:
If the comparison is with the Eurozone, then different labour market policies must be part of the answer. But there is also a contrast with the US to explain. In the latter participation has continued to fall even though the unemployment rate has followed a similar path to the UK's. The UK and the US are usually classified as having flexible labour markets but the labour market response to a similar-size shock has been different. Part of the explanation for the differences with both the Eurozone and the US is the depreciation of sterling which followed the shock and which allowed a relatively painless fall in real wages (at least this is what an old Keynesian would argue). The Eurozone, like the US, is a much more closed economy than the UK so a helpful exchange rate response was much less likely.

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Question 1: Do you agree that lower real wage growth was beneficial for employment levels during the Great Recession?

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Answer:
Agree
Confidence level:
Very confident
Comment:
UK employment growth has been very strong during the recession and subsequent recovery. The unemployment rate rose initially but then fell back to the pre-crisis level or even below it. So it seems very unlikely that aggregate demand has been deficient for most of this period. If there was some tendency for the fall in real wages to reduce demand, there must have been other factors working in the opposite direction, such as the automatic stabilisers or indeed the rise in employment itself.

A “new” UK industrial strategy ?

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Question 2: Do you agree that the UK needs a new regional policy?

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Answer:
Strongly agree
Confidence level:
Very confident
Comment:
Regional disparities in GDP per head seem to be widening. So something needs to be done to reverse this trend. Congestion and planning regulations mean that simply encouraging people to move South to take advantage of better wages and jobs is not going to work. But I doubt whether Enterprise Zones are going to be a big part of the solution. In principle the Northern Powerhouse is the right sort of approach. This is what the French have done in developing "poles de croissance" such as the Toulouse region. In practice, the Northern Powerhouse is proceeding at a glacial pace.

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Question 1: Do you agree that the UK needs a new industrial policy?

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Answer:
Strongly agree
Confidence level:
Extremely confident
Comment:
I strongly agree and am extremely confident in doing so because the term “industrial policy” is very broad but must cover some things which could help to solve our productivity problem. I am strongly in favour of additional spending by the state on infrastructure, R&D, training, and education since it is well known that we have clear deficiencies in these areas. Extra spending in at least some of these areas will have a regional bias. Beyond this there is a case to be made for trying to foster development in sectors where the UK is thought to have a comparative advantage. But it is not clear why the sectors detailed in the Green Paper were selected. I can think of others, e.g. software, for which a case could be made.

German current account surpluses

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Question 2: Do you agree that the German government should increase public spending given its persistently large current account surplus and given that it is part of the Eurozone?

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Answer:
Strongly agree
Confidence level:
Very confident
Comment:
The same effect could of course be achieved by cutting taxes.

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